Bank Of England Cuts Base Rate To 4.00%: What It Means For Your Mortgage

 

In early August 2025, the Bank of England trimmed the base rate down to 4.00% from 4.25%, marking the fifth reduction since August 2024. This move is all about boosting the economy and nudging growth forward.

You might even see another drop later this year...

But let’s remember, the Bank is juggling growing the economy while keeping inflation in check. If inflation stays at its current rate (3.6%), they might hold off on future cuts until it gets closer to 2%.

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Good news for mortgage borrowers!

The gradual lowering of the base rate over the past year is pushing fixed mortgage rates down, giving a friendly boost to homebuyers and those thinking about remortgaging.

Picture this: the average two-year fixed rate has fallen from 5.77% to 5.01% since last August, and a five-year fixed isn’t far behind, moving from 5.38% to 5.01%. For those on standard variable rates, switching to a fixed rate could save you a tidy £372 a month!

(Calculations based on a £250,000 mortgage over a 25-year term on a repayment basis.)

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And here’s another win: lenders are easing up on their stress tests (part of their affordability checks), making it easier to get a mortgage. With potential for another rate cut, there’s every reason to feel good if you’re on the hunt for a home loan.

The base rate cut also pairs nicely with efforts like the new Mortgage Guarantee Scheme, making home buying easier for first-time buyers.

This initiative is perfect if you’ve only got a 5% deposit, giving you the chance to access deals of up to 95% LTV. Curious about this scheme and your eligibility? Chat with Quealy & Co Financial Services, and they’ll help find the right fit for you.

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If your mortgage deal is ending in 2025, or you’re purchasing a property:

• Snap up a rate now: With lenders playing it safe on pricing, rates can shift quickly.
• Stay market-savvy: Keep an eye on rate changes or better yet, let a broker watch your back so you don’t miss any opportunities.
• Check on rate reductions: Many lenders allow you to secure a lower rate if it becomes available during the buying process, as long as you haven’t exchanged.

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Quealy & Co Financial Services is here to help by:

• Securing competitive rates early
• Watching the market for better rates
• Making the most of rate switches
• Breaking down lender strategies

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Stay in the know with Quealy & Co and guess what? No broker fees here!

With ongoing market uncertainty, timing and attention to detail are key to securing the ideal mortgage to suit your circumstances. We stay on top of the mortgage market, so you don’t have to.

Feeling a bit lost with changing rates, lender rules, or property prices? Our team is on hand and happy to chat about your specific situation.

Reach out today for a friendly, no-pressure session with Quealy & Co’s knowledgeable Financial Services team. Let’s find the mortgage that suits you perfectly.

Call us: 01795 505761

Email us: mortgages@quealy.co.uk

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⁠**Your home may be repossessed if you do not keep up repayments on your mortgage.**

Quealy & Co Financial Services Ltd. is authorised and regulated by the Financial Conduct Authority No. 919693